EU executive plans growth in fintech sector with new law

The European Commission are exploring ways to ensure the fintech sector still thrives in the EU, post-Brexit.

The EU executive is set to propose a draft law, regarding crowdfunding and blockchain technology standards to help the fintech sector grow.

Plans are expected to be published as early as this week, as the European Commission aims to encourage the fintech sector to flourish in both skills and jobs.

As Brexit looms and the UK prepares to make its exit from the EU, pressure has been put on Brussels to make more effort to encourage young fintech firms to open up in the EU.

Included in the EU’s plans is a bloc-wide licensing system designed specifically for crowdfunding platforms, which will enable investors to invest in start-ups and help nurture and grow the new talent in the fintech industry.

“An EU framework would offer a European passport, and, at the same time, ensure the proper management of platforms and the protection of fund providers,” the draft document said, according to Reuters.

The law will not involve regulatory approaches fintech firms currently face, instead many of the measures taken will involve regulators and the industry working together.

Businesses’ resilience to hacking will also be assessed before the law is passed, determining both the positives and negatives of ‘cyber threat testing’ for market participants and infrastructures. Furthermore, the EU executive is expected to formulate common standards for blockchain technology to enable cryptocurrencies to have a future in payments in the future in a secure manner.

“An EU-wide fintech market will not reach its full potential without the development of open standards that make interoperability possible, simplify the exchange of data between market players and facilitate competition,” the document says.

Ahead of the draft law the European Commission will present a blueprint, which will contain the correct practices and guideline for setting up innovation hubs for the fintech sector.